Canadian stocks fell for the first time this week, led by financial shares, after Manulife Financial Corp. posted a record loss and an increase in U.S. jobless claims fueled concern the economic recovery is slowing.
Manulife Financial, Canada’s largest insurer, tumbled 11 percent after reporting a second-quarter loss of C$2.4 billion ($2.37 billion) as equity markets declined. Sun Life Financial Inc., Canada’s third-largest insurer, fell 4.7 percent. Royal Bank of Canada, the country’s largest bank, retreated 1.7 percent. Viterra Inc., Canada’s largest grain handler, rallied 6.1 percent as wheat rose to a 23-month high after Russia, the world’s third-biggest grower, banned exports.
The Standard & Poor’s/TSX Composite Index decreased 70.28 points, or 0.6 percent, to 11,774.77 at 4:10 p.m. in Toronto.
“Manulife came out with depressing quarterly results and that’s casting a spell over the financial sector,” said Greg Eckel, who helps manage C$900 million ($857 million) at Morgan Meighen & Associates Ltd. in Toronto. “There’s still uncertainty over where the U.S. and the global economy will land. Investor confidence hasn’t really been rebuilt.”
The S&P/TSX has climbed 4.3 percent this quarter as stronger-than-forecast corporate earnings worldwide propelled the Thomson Reuters/Jefferies CRB Commodity Price Index to a 7.4 percent gain. Energy and raw-materials companies make up 45 percent of Canadian stocks by market value, according to Bloomberg data.
The S&P/TSX Financials Index retreated 2 percent, the most among 10 industries in the benchmark index for Canadian equities. Manulife Financial plunged 11 percent to C$14.20 and Sun Life lost 4.7 percent to C$27.27 as declines on the Standard & Poor’s 500 Index and Canada’s benchmark Index during the quarter led to profit declines at both companies. Insurers need to boost reserves when stocks decline to cover guarantees on products such as annuities.
Royal Bank fell 1.7 percent to C$52.67. Toronto-Dominion Bank, the country’s second-largest bank, slipped 1.3 percent to C$73.16. Bank of Nova Scotia, the third biggest, slumped 1.6 percent to C$50.79.
Teck Resources Ltd., Canada’s largest base-metals and coal producer, sank 3.7 percent to C$35.84 after the U.S. Labor Department said first-time claims for unemployment insurance climbed by 19,000 to 479,000 last week. BlackBerry smartphone maker Research In Motion Ltd., which gets most of its sales in the U.S., fell 2.2 percent to C$53.06.
Suncor Energy Inc., Canada’s largest oil and gas producer, declined 0.3 percent to $34.18. Crude oil for September delivery declined 46 cents, or 0.6 percent, to $82.01 a barrel in New York. Futures are up 14 percent from a year ago.
Thomson Reuters Corp. fell 1.8 percent to C$38.28 after the information provider, which competes with Bloomberg LP, was downgraded to “hold” from “buy” at Deutsche Bank AG. The company’s earnings was “a rare disappointment” in an earnings season marked by companies beating analyst estimates.
BCE Inc., Canada’s largest phone company, rose 1.8 percent to C$32.16 after reporting second-quarter profit that beat analysts’ estimates, helped by the addition of Apple Inc.’s iPad and iPhone, and raised its full-year forecast and dividend. Profit excluding some items was 77 Canadian cents a share. Analysts predicted 72 cents, the average of 16 estimates compiled by Bloomberg.
Viterra gained 6.1 percent to C$9.03. Wheat for December delivery rose 59.75 cents, or 7.9 percent, to $8.1525 a bushel on the Chicago Board of Trade. Earlier, the price advanced by the CBOT’s 60-cent limit to $8.155, the highest level since August 2008, after Russia, the world’s third-biggest grower, banned exports because of the country’s worst drought in at least a half-century. Corn and rice also surged.
Agrium Inc., Canada’s second-largest fertilizer producer, jumped 1.5 percent to C$68.45. Potash Corp. of Saskatchewan, the world’s largest crop nutrient company, rallied for a sixth day, climbing 2.5 percent to C$115.97.
“With rising grain prices there’s demand for great crop yield and people are looking for more aggressive fertilizer applications, which companies like Potash can provide,” Eckel said.